| PRACTICE — Discovery — Privilege against self-incrimination — Actions for recovery of debt — Claimant seeking disclosure in support of proceedings to attach debts owed by third parties to defendant — Third parties invoking privilege against self-incrimination in respect of disclosure of information relating to alleged bribes — Whether proceedings for recovery of debt “proceedings relating to property” — Whether bribery “related offence” to that of fraud — Fraud Act 2006, s 13
Kensington International Ltd v Republic of Congo (Vitol Services Ltd and others, third parties) [2007] EWCA Civ 1128
CA: May, Carnwath, Moore-Bick LJJ: 7 November 2007
On the proper construction of s 13 of the Fraud Act 2006, proceedings for the recovery of a debt were “ proceedings relating to property” within the meaning of s 13(3) and bribery, whose essential feature was deception, was an offence involving “fraudulent conduct or purpose” within the meaning of s 13(4)(b). It followed that by virtue of s 13(1) the privilege of self-incrimination was not available as a defence against an order, made in proceedings for the recovery of a debt, requiring the disclosure of documents concerning alleged payments of bribes.
The Court of Appeal so held when dismissing appeals from various orders made in respect of proceedings brought by the claimant, Kensington International Ltd, against the defendant, the Republic of Congo. By one such order, Gross J on 13 July 2007 held that the third parties, Vitol Services Ltd, Vitol Broking Ltd, Gilles Chautard and Shlomo (Sam) Lambroza, were not entitled to rely on the privilege against self-incrimination in respect of the disclosure of information and documents concerning payments said to have been made by or on behalf of their parent company, Vitol Group SA, to senior officials of the defendant by way of bribes. The claimant had acquired sovereign debt, on which the defendant had defaulted, with a view to recovering the outstanding sums by legal action and sought, inter alia, to attach certain debts alleged to be owed by the Vitol Group to the defendant.
The Fraud Act 2006 provides by s 13: “(1) A person is not to be excused from — (a) answering any question put to him in proceedings relating to property... on the ground that doing so may incriminate him ... of an offence under this Act or a related offence ... (3) ‘Proceedings relating to property’ means any proceedings for — (a) the recovery or administration of any property, (b) the execution of a trust, or (c) an account of any property or dealings with property, and ‘property’ means money or other property whether real or personal (including things in action and other intangible property). (4) ‘Related offence’ means — (a) conspiracy to defraud; (b) any other offence involving any form of fraudulent conduct or purpose.”
MOORE-BICK LJ said that an application for disclosure in Norwich Pharmacal proceedings (see Norwich Pharmacal Co v Comrs of Customs & Excise [1974] AC 133) could be regarded in some senses as independent of the substantive claim which it was designed to support, but it did not necessarily follow that the expression “proceedings relating to property” in s 13(1) of the 2006 Act was intended to refer only to the immediate proceedings between the applicant and the person from whom disclosure was sought. In the present case substantive proceedings had been brought to recover the amounts owed by the defendant and in those circumstances the expression “proceedings relating to property” extended to the proceedings viewed as a whole. Since “property” in s 13(1) included “money”, the expression “ any proceedings for the recovery of [money]” must be understood as including proceedings to recover a debt by suing on the chose in action: see Bank of England v Riley [1992] Ch 475. The judge had found that the third parties were at risk of incriminating themselves of offences under other statutory provisions and at common law, but that the offences in question were all “related offences” that involved corruption in one form or another. Mr Gruder submitted that they did not involve any form of fraudulent conduct or purpose because none of them required proof of dishonesty, which he said was an essential ingredient of fraud. The starting point of the inquiry should not be dishonesty but fraudulent conduct or purpose as that expression was used in s 13(4)(b).The 2006 Act did not contain a simple definition of fraud or fraudulent conduct; rather, it defined the statutory offence of fraud by reference to a breach of ss 2, 3 and 4. The essence of fraud was deception coupled with injury or an intention to expose another to a risk of injury by means of that deception. Although it was difficult to see how fraud of any kind properly so called could be committed without dishonesty, dishonesty was not the critical distinguishing mark of fraud. For an offence to involve some form of fraudulent conduct or purpose it had to involve an element of deception. Offering a bribe with the intention that it be accepted and acted upon involved a form of fraudulent conduct, or at any rate of fraudulent purpose, within the meaning of s 13(4)(b).
The appeal would be dismissed.
MAY LJ agreed and CARNWATH LJ delivered a concurring judgment.
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